Beside the current pandemic, the main topic covered by the news these days is the presidential elections in the USA. What is particularly worrying this year is how divided the country seems to be. Actually, I found it very disturbing that by selecting the news channel you watch, you already decide which candidate you support. If you watch CNN, Biden is your man. Do you prefer Fox News? Then you will most probably be supporting the reelection of the current president. It has come to the point that these news channels no longer inform you to make your decision for whom to vote. Instead, they confirm your choice that the candidate you support is the right one and that the other candidate is the worst one possible for America. The same is true when reading articles or posts on social media. The algorithms will propose more articles, more posts, more news going in the same direction and supporting the same ideas. Your initial judgment then gets confirmed by more and more information instead of being challenged by opposite positions and arguments. That does not only prevent critical thinking, but can also distort your perception of the reality.
This tendency to search for information that support your prior beliefs and/or ideas is called confirmation bias. It is an important type of cognitive bias that has a significant effect on decision-making processes as it interprets and/or favor the evidence you select.
How about business? Is it influencing your professional decisions as well?
The choice of information
Let us take an example that we have already used in a previous article (see Death by KPI), the ice cream shop. Imagine that after having opened your first ice cream shop downtown Zurich you get so much success that you are considering opening a second store. In fact, you have already seen a great place available to rent in the trendiest neighborhood. You could well imagine yourself working there among the hipsters. Since opening a second store is a significant business risk for you, you decide to conduct a risk assessment to support your future decision. You start then to look for information that will help you to evaluate the risk of not being able to sell sufficient ice cream to be profitable.
First, you want to get a good idea on the business environment. You might ask the real estate company promoting the premise for some information on how attractive the neighborhood is. And why not asking the guy of the barbershop next door about how his business is going. You then look at the city council statistics to have an idea on the average rent price in that part of the city. Taking a stroll through the neighborhood, you see how busy it is in the evening. And the best of all is that there is no ice cream shop around. It will be a monopoly! The more you look for information; the more certain you are to make the right decision. Does it sound right?
Actually not. First, the scope of your assessment already biased the answered. The question was not to open a second store, but to open a second store in a specific location. In other words you’ve already made the choice to open it there. The information you look for afterwards will most probably confirm that decision. The real estate agent is interested to rent that premise. He/she will not deter you to do so. Same for the owner of the barbershop next door. After all, empty shops are never good for business. Therefore, it is also in his interest to have you moving in. The statistics of the average price will confirm that you will pay a fair rent for the shop. Nothing else. And yes, the area is quite active in the evening, but do the people visiting bars and clubs want to eat ice cream?
Do hipsters eat ice cream?
In fact if the initial question had been ‘where should I open my second store?’
You might have looked for different information. Maybe you would have used your own statistics to find out what is your main customer segment. You might have figured out that families is the category of people buying most of your ice cream. In that case, the trendy neighborhood is probably not the best place to open a new business. You could have then made a survey by your customers to ask in which part of the city they would like you to step in.
This example shows how keen we are to make decision based on our gut feeling, and start looking for data and or evidence afterwards to have the decision supported by evidence.
And by the way, if you have any doubts, hipsters actually eat ice cream 😉🍦
How to fight the confirmation bias
Unfortunately, like for most of those cognitive biases, there are no magic solutions. There are rather a couple of tips that one can follow to avoid falling in those psychological traps:
- Stay aware about it. Keep asking yourself whether you are truly objective, or looking for confirmation. This not only apply for the information you are seeking, but also for the people you are consulting in your decision-making process.
- Change the initial question you are trying to answer. Make sure it is not framed. Consider whether you will look for the same information if the question is formulated completely differently.
- Seek out information from a wide range of sources and look for conflicting evidence and opposite opinions.
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